INCOME TAX ACT, 1961

Section 50C

Capital gains - Applicability of section 50C - Re-computation of sale consideration based on higher value fixed by Sub-Registrar for the purposes of computing stamp duty -

Assessee's case was reopened under section 147. During reassessment proceedings, AO recomputed long-term gain pertaining to sale of a property by assessee and adopted the sale consideration at Rs. 3,79,90,860 based on the valuation report, by applying section 50C. Further, the said action of the AO was sustained by CIT(A) as well as Tribunal. Held: It was not disputed that sale consideration received by assessee was at the rate of Rs. 400 per square feet for the entire extent and accordingly, the total sale consideration as reflected in the deed of conveyance was Rs. 2,80,00,000. Further, Sub-Registrar did not accept the value computed at Rs. 400 per square feet for the purpose of calculating stamp duty, and he determined the value of the property at Rs. 555 per square feet. Further, the AO while reopening the assessment took note of the figure of Rs. 555 per square feet and accordingly, recomputed the sale consideration at Rs. 3,79,90,860. However, re-computation of the sale consideration based on the higher value fixed by the Sub-Registrar for the purposes of computing stamp duty, was wholly erroneous. It was not the case of the AO that the assessee received sale consideration of Rs. 3,79,90,860. Rather, the sale consideration received as reflected in the deed of conveyance was only Rs. 2,80,00,000. Thus, the AO committed a serious error in adopting the sale consideration at Rs. 3,79,90,860.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2010-11

SUBSCRIBE FOR FULL CONTENT